If your friend bought a share in a restaurant, and shared with you the list of the best restaurants in the city, would you agree with their recommendations? Or would you take their suggestions with a pinch of salt?
Chances are, you’d do the latter.
But what if you didn’t know your friend owned a share in the restaurant? You wouldn’t know that the restaurant they rank as the Best in Town is their own. Doesn’t it sound wrong of them to hide such a fact while recommending you their services?
A similar thing is going on with Threadgill Financial, an innocent-looking advisory firm in Texas. Their clients probably don’t know if they are getting the best financial returns possible or not.
The shady terms and conditions and the offered services of Threadgill Financial suggest they might be a dangerous company focused on taking the advantage of their clients.
Threadgill Financial: Who are they
Threadgill Financial is a financial planning company based in Woodlands, Texas. They are located at 1610 Woodstead Ct # 194, Spring, TX, 77380, United States.
Registered in 2018, they serve in one state and manage $255.3 million. They provide services to 324 clients with a staff of two people.
When you compare them with other financial planning companies in the region, they have relatively lower experience and staff.
At the time of writing this Threadgill Financial review, they have two people in their firm:
- Zachary Threadgill JD, CFP
- Adam Threadgill JD, CFP
Zachary is a former tax attorney and a Certified Financial Planner. While his website bio doesn’t explain how many years he has actually spent in the industry, it does point that he has spent several years as a financial planner. He focuses on advising his clients on retirement planning.
Adam was a US Marine and was deployed to Fallujah, Iraq. After being discharged from Marine Corps, he completed a degree in Bachelor of Arts and got a Doctorate of Jurisprudence. He is also a Certified Financial Planner.
What is the role of a financial advisor?
For payment, a financial advisor offers clients financial assistance or recommendations. Financial advisors, often known as advisers, offer a wide range of services, including investment management, tax preparation, and estate planning.
Both of them work together to run Threadgill Financial. Looking at their resumes, you’d think that they should be able to run a spectacular firm, but their lack of professional experience is clearly visible in their offerings.
That’s because when you compare their offered services with other financial planning firms, you’d notice just how many disadvantages you’ll get by picking them. The next section of my Threadgill Financial review will throw more light on why their services might not be suitable for you.
Why Threadgill Financial is a Bad Choice for You
There are many issues present in the service of Threadgill Financial. The following points will help you understand why I’m constantly reiterating that you shouldn’t do business with this firm.
They offer very high risk Mutual Funds with 12b-1 Fees
When a financial advisor or planner recommends mutual funds that have 12b-1 fees, their intention gets in question.
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Because mutual funds with 12b-1 fees require you to pay higher (thus, a higher expense ratio) in comparison to mutual funds that don’t have such fees. 12b-1 fees is the fees paid out of the ETF or mutual fund assets to cover the costs of marketing and selling the mutual fund shares.
It is among the hidden costs a broker can charge their client, without their knowing. This is why I don’t recommend hiring financial service providers who offer mutual funds with 12b-1 fees.
You might think that if a mutual fund costs you more, it must offer better performance, which would be wrong to assume.
SEC conducted a study on the performance of mutual funds that have 12b-1 fees and those that don’t have such fees. They found no difference between the performance of the two. So, investing in a mutual fund with 12b-1 fees only puts you at a loss as you pay more than you should.
Threadgill Financial recommends its clients to invest in mutual funds with 12b-1 fees, making it difficult to trust them. They might be recommending them due to the prospective financial incentive they can get rather than the financial interests of their clients, which is highly unethical.
They offer Products with Performance-based Fees
When a financial planner offers products with performance-based fees, he or she gets paid when they outperform an index (or a similar benchmark).
On paper, it seems like a fantastic compensation structure. After all, your financial planner would get paid only if they reach a specific goal. But there’s a huge flaw with performance-based compensation.
The Investment Advisers Act for RIAs in 1940 bans most financial advisors from charging performance-based fees because it incentivizes the use of unethical and risky investment strategies, which puts the client at additional risk.
The SEC started allowing RIAs to offer products with performance-based fees only after 1985 with many conditions to ensure they didn’t damage the clients’ interests.
Many experts have researched the returns of performance-based fee products and products without this fee-structure. They found no difference in the returns of both of these products.
Hence, by investing in such products, all you’re doing is facing an additional risk of losing your funds.
Threadgill Financial recommends products with performance-based fees. Investing in such products can cause you to lose all of your funds quickly and you wouldn’t be able to do much about it.
The risk for such investments only increases with time and is highly detrimental particularly during down markets (like the current pandemic-ridden market). However, most clients are unaware of the highly risky nature of these investment products. Because of this, unethical finance professionals might recommend these products and enjoy higher fees while putting the client at unnecessary risk.
They perform Side-by-side Management
Threadgill Financial performs side-by-side management, another practice that’s looked down on in the financial advisory sector.
Side-by-side management means the financial planner manages hedge funds or mutual funds with smaller retail accounts. In such cases, the financial planner gets an incentive to favor the larger fund which causes unequal trading charges and unfavorable trade executions for the retail clients.
They trade Recommended Securities
In Threadgill Financial’s disclosure, they have mentioned that they trade recommended securities.
This means they trade the securities they recommend to their clients. You can understand why it would cause conflicts.
When a financial planner trades particular securities, they can manipulate their returns by recommending you those securities. As a result, you would get dishonest financial recommendations that aren’t focused on your interests.
In other words, your financial planner would be using your money to make money for himself. It’s a highly unethical practice, which is why I don’t recommend hiring any financial planner who trades recommended securities.
It’s possible that Threadgill Financial might be involved in front running. Front running is when your financial planner trades specific securities before you.
In short, they have an incentive to give you flawed financial advice. You wouldn’t even be aware of the profits you are missing out on because of this.
They have a Terrible Advisor-to-Client Ratio
The advisor-to-client ratio at Threadgill Financial is 1:162. This means, one financial planner at this firm advises 162 clients at a time, which is a substantially high number.
When a financial planning firm has such a high advisor-to-client ratio, it makes it very difficult for them to offer personalized advice to their clients.
Suppose you had to advise 100 people on something. Do you think it would be possible to give them highly specific and personalized advice to each one of them?
In such cases, the financial planning firm resorts to giving cookie-cutter advice. Cookie-cutter advice, as the name suggests, is template-based advice financial planners give to their clients.
The problem with cookie-cutter advice is that it doesn’t focus on your issues and goals. Every investor has unique requirements and personal goals they want to achieve. The duty of a financial planner is to offer honest and personalized financial advice to their clients.
Hence, if a financial planner resorts to giving cookie-cutter advice, it is unethical. Because it means the financial planner doesn’t care about the goals and requirements of the clients. You would get mediocre or poor results with cookie-cutter advice than you’d get with personalized, meticulous advice.
For example, you feel heaviness in your chest. Now you can do two things to determine your sickness. You can either google your symptoms and read blog posts or you can call your physician. The former is akin to getting cookie-cutter advice while the latter will help you get personalized advice.
They don’t take responsibility for their service/advice (Important)
Probably the biggest reason why I don’t recommend working with Zach and Adam’s firm is the detailed disclaimer present in the footer of their website. The disclaimer is in small print and most people wouldn’t even notice such a thing:
The disclaimer states “Diversification does not guarantee a profit or protect against loss in a declining market It is a method used to manage investment risk.”
Which seems like a harmless little sentence is actually the Get out of Jail card for the people at this company. You see, if a financial planner gives you wrong advice, you can go to the SEC and file a complaint about this matter.
However, this little disclaimer protects Threadgill Financial from such an event. When you pay them for their service, you automatically agree to this disclaimer, and so, you can’t hold them responsible for the returns on their financial advice.
If you’d raise a dispute with the SEC about their flawed financial advice, their lawyer would inform you of this clause and they would go scot-free. This is a serious issue and it suggests that Zachary and Adam don’t have the right intentions.
They have put such a clause in their terms and conditions because they are well-aware of their offered services. I have already explained why you can’t trust their recommendations, this simple clause ensures that they don’t face any repercussions for causing you financial loss.
What do these Qualities mean for you?
In the previous points of my Threadgill Financial review, I pointed out the serious flaws in this firm’s offered services. You can see that many of their offered services go against the interests of their clients. They have put themselves in a position where they earn more money by giving biased or dishonest financial advice to their clients.
It’s already highly difficult to distinguish good financial advice from bad. In this industry, personalization matters a lot as it ensures that you will get dedicated attention and optimal advice.
But due to the high number of clients and low staff (only two people), Threadgill Financial can’t offer the necessary level of personalization you’d need to get the best financial results.
It’s important to know these things because it helps you determine if you can trust a financial planner or not.
Moreover, when they make money by recommending you specific products, it means they care more about themselves than you, the client, which is a cardinal sin in financial advising.
Threadgill Financial Review 2021: Conclusion
Threadgill Financial seems like an amazing financial planning firm on paper, but their offered services and lack of experience shows that you can’t trust them. The way they have tried to protect themselves from potential disputes by adding a mischievous disclaimer in fine print, indicates they know their clients aren’t getting the best financial advice.
In addition, they only have two people in the firm handling more than 300 clients. This means they don’t have the sufficient manpower to give personalized services to each client. It’s practically impossible so it would be wrong to expect them to as well.
However, it means you will have to take their recommendations with a grain of salt because chances are, they offer cookie-cutter to every customer.
It would be best to find a firm that has more experience, more resources, and more care for its clients’ success.
Avoid Threadgill Financial! They provide high-risk services and have shady disclaimers in place to avoid lawsuits. The service providers lack experience and use deceptive tactics with their clients. It is strongly advised that you go for other experts.
- Very Inexperienced
- Cookie-Cutter Advice
- Deceptive Terms & Conditions
- Very High Risk